Legacy: What Does It Really Mean

Insights

Legacy: What Does It Really Mean? 

Words carry power. But sometimes, through overuse, we drain them of meaning. The word legacy has suffered this fate. These days, we often use it in place of “outdated” to refer to things we tolerate simply because they’re old (i.e., “legacy media”).

But legacy bears a rich meaning. Its roots stem from the Latin word legatus: “an envoy, ambassador, or one who goes before.” A legacy (a life’s work) speaks for its founder long after their physical voice has faded.

When busy blazing trails—founding a business, launching a charity, or raising a family—it’s easy to find yourself enmeshed in the day-to-day, neglecting the message your life will convey to others. Address this, with legacy planning.

More Than “Math and Money”

In the financial world, “legacy planning” often boils down to numbers on a spreadsheet—interest rates, trusts, percentages. While such “nitty gritty” details play a critical role in ensuring a sustainable future, they fail to capture legacy’s full power.

Planning for a world without you in it can trigger intense emotions. For many, this may be the first time they’ve confronted their mortality. Prepping for the end also places family relationships under the microscope, leaving you to ponder questions like:

• Who “deserves” what?
• Will my loved ones use their resources wisely without my guidance?
• Will future conflict shred my children’s relationships?

Plus, past trauma can resurface. How did your parents’ legacy make you feel? Did you feel “cheated” by your inheritance? Such lingering baggage often influences our choices unconsciously.

As you map your legacy, take care to acknowledge and work through the emotional dimension—an aspect that transcends numerical concerns.

The Scope of “Legacy”

Legacy planning offers an opportunity to define the values you wish your life to represent. While immediate financial impact offers tremendous benefits, legacy planning furnishes a chance to arm your emissary with an enduring, life-defining message. 

Take time away from the hustle to define your values. 

Here’s a helpful starting point: Consider the charities and causes you currently support. How can you structure your estate to publicly enhance these missions and inspire others to give?

When death enters the conversation, we tend to shy away. Instead, embrace it. See it as a chance to leave the world a better place than you found it. Incorporate concrete strategies like:

• Adding a charitable bequest to your will
• Naming a charitable beneficiary for your retirement account
• Contributing to a donor-advised fund, which offers tax-free growth

Taking these steps can actually inspire you to pursue greater heights. After all, the more you achieve, the more you can give.

Accounting for Taxes

You want your life’s work to benefit your loved ones and the causes that stir your spirit—not the IRS. 

Nurturing income streams and accumulating assets—these represent the pillars of financial success. But many high-net-worth individuals spend decades building wealth, only for their heirs to watch it crumble due to weak tax strategy. Building alone falls short.

The current IRS estate tax exemption sits at $13.9 million—a sizable sum that offers ample room to shield assets from taxation. 

Take advantage of this extra “space” and transfer as many assets as possible into custom trust structures that “freeze” asset value upon transfer and provide sound stewardship. 

Also, consider making advance gifts to loved ones that fall under the current annual threshold of $19,000—an excellent way to kickstart your legacy.

When it comes to tax planning, an experienced wealth management team can offer invaluable guidance.

Financial Literacy: The Cornerstone of a Sound Legacy

Legacies don’t write themselves. A memoir requires the ability to express, in rich language, your ideas and values. Likewise, the financial world requires its own form of literacy to convey your vision. Unfortunately, traditional education rarely teaches it.

In the realm of legacy planning, it’s critical to:

• Understand the function of roles like trustee, executor, and beneficiary
• Grasp concepts like power-of-attorney (POA)
• Master the mechanisms behind debt, interest, and tax brackets

The more you invest in financial education, the more freedom you’ll have to enjoy the fruits of your labor. You’ll also make decisions from a proactive (rather than reactive) stance.

Since children and grandchildren factor heavily into legacy planning, it’s critical to ensure they also receive a sound grounding in financial literacy. This will help them maximize what they receive and carry your values forward.

To that end:

• Introduce critical financial concepts early – Begin by outlining how to save and budget, then expand into deeper topics as children mature.
• Draw on real-life scenarios – Share your thought process as you navigate significant financial decisions, such as buying or selling a house.
• Allow them to manage money – Offer them an allowance to budget, or a pint-sized stock portfolio to oversee.
• Involve them in estate planning discussions – Articulate your vision for the future and solicit their input. This readies them for future financial roles (i.e. executor).

Building wealth is one thing. Preserving it is another. Financial literacy helps sidestep snake pits while furnishing you, and your heirs, with the tools to craft a lasting endowment.

Define Tomoro, Today

Money, in itself, holds no meaning—it’s only numbers. Money’s power stems from vision and stewardship. That’s why legacy planning encompasses far more than detached calculation. It calls for a philosophy of life—and a will to change the world. 

At Tomoro, we’ve mastered the full spectrum of legacy planning. Our expert team will guide you through the broader, emotional elements alongside the finer financial details. We take the time to truly see your vision and acknowledge the challenges you face.

Ready to send forth your emissary? Let’s talk today.